The specter of mounting student loan debt looms large over millions of Americans, but proactive steps can be taken to avert this financial burden.
In the quest to help their children avoid college debt, parents have more influence and options than they may realize
It’s never too early for families planning for college to start strategizing ways to sidestep the potentially life-altering consequences of excessive student debt, which can hinder adulthood milestones like home ownership and starting a family. Parents play a pivotal role in imparting the importance of financial planning to the next generation, helping them avoid college debt.
Experts stress that discussions about college finances should encompass all associated costs, not just the institution’s sticker price. Jocelyn Pearson, founder of The Scholarship System, emphasizes the need to calculate the true total cost of education, including hidden expenses. Using student loan calculators to project post-graduation monthly payments is also crucial.
While these conversations may require parents to divulge details about household budgets and income, transparency is key. Understanding disparities in costs between in-state and out-of-state universities, as well as four-year schools versus community colleges, is equally essential when choosing a college.
The grim reality is that college costs have plunged over 45 million Americans into a staggering $1.7 trillion of student loan debt
Although the Biden administration‘s proposal to erase $10,000 of student debt was blocked, the Department of Education is formulating a relief plan to avoid college debt, though details and eligibility criteria remain uncertain.
A 529 plan is a highly recommended long-term savings strategy for parents to initiate from their child’s infancy. These accounts offer tax benefits based on state residence and can be utilized for various types of education. Bruce McClary, Senior Vice President of Media Relations and Membership for the National Foundation of Credit Counseling, recommends allocating around $300 monthly for an in-state, four-year college to build an effective 529 plan, emphasizing its role in warding off future student debt to avoid college debt.
Scholarships present a potent means to avoid college debt, with opportunities beginning as early as high school and extending through college. The National Scholarship Providers Association reports that around $100 million in scholarships go unclaimed annually to avoid college debt. Experts suggest exploring local sources and financial aid offices for scholarships that may continue to alleviate costs beyond high school.
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